In our continuing series of discussions with top supply-chain company executives, Geoff Muessig discusses the less-than-truckload market, choosing a carrier partner, and his company’s sustainability initiatives.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
Geoffrey Muessig is executive vice president and chief marketing officer for Pitt Ohio, a Pittsburgh-based regional trucking firm that specializes in less-than-truckload (LTL) carriage. Muessig has more than 34 years of experience in the transportation industry and has been with Pitt Ohio since 1988, when he started his career as a sales representative. In addition to leading Pitt Ohio’s sales and marketing efforts, he serves as chairman of the LTL Digital Council. Muessig holds an M.A. in history from the University of Chicago and an MBA from the University of Pittsburgh.
Q: The trucking industry has gone through a lot of change this year. What is the current state of the market and how is Pitt Ohio reacting?
A: Year-over-year demand for domestic surface transportation services has declined. It is well documented that the pandemic created a surge in demand for goods, which benefited every mode of U.S. transportation. In the pandemic’s aftermath, the American consumer has pivoted toward spending more money on services.
Demand for surface transportation services has declined from the pandemic’s peak years. However, it is important to note that most trucking companies are handling more shipments and tonnage post-pandemic than they did pre-pandemic.
Furthermore, the structure of the LTL and TL [truckload] freight markets differ. The 20 largest LTL carriers handle the preponderance of LTL shipments, while the 20 largest TL carriers handle a much smaller percentage of TL shipments. In the face of a shipment decline, the structure of the LTL market works to promote price stability, while the structure of the TL market promotes much more price volatility.
Pitt Ohio is focused on improving our value proposition for our customers. We are working to reduce our administrative expenses by digitizing the exchange of information with shippers, 3PLs, and partner carriers. Furthermore, we have expanded our coverage area to include upstate New York, and we have successfully launched an express three-day service to California [from the carrier’s core Mid-Atlantic territory]. In the third quarter of 2023, Pitt Ohio’s Supply Chain business unit will deploy a freight forwarding solution.
Q: As a leading regional carrier specializing in LTL, what are the most important reasons for your company’s growth and success?
A: Pitt Ohio’s success is built on the consistent hard work and effort of our employees. We message to our employees and our customers that “our employees come first and our customers come a close second.” Pitt Ohio works hard to create a strong business culture that promotes employee engagement.
More than 75% of our drivers and dockworkers tell us in companywide surveys that they would highly recommend Pitt Ohio to their friends and family members as a good place to work. Higher employee engagement translates into less absenteeism and more attention to detail, which leads to better on-time delivery service and fewer freight claims. Better service and fewer freight claims lead to increased customer loyalty, growth, and success. In short, happy employees create happy customers.
Q: What should shippers look for in partnering with an LTL carrier?
A:All LTL carriers handle LTL shipments, but all LTL carriers are not interchangeable. Pitt Ohio focuses on fit when we seek to partner with a shipper. Shippers should be able to clearly articulate their priorities to their existing and potential carrier partners.
Coverage area, service performance, and price are important determinants, but niche needs—like the ability to perform liftgate and residential deliveries or safely transport hazardous material, high-value shipments, or fragile goods—determine whether one carrier is a good fit and another carrier is not.
Shippers should also consider the delivery profile of their customers. Some LTL carriers focus on serving the retail market, while other carriers focus more of their time and attention on serving industrial customers. Service expectations and equipment requirements vary between these market segments.
All shippers should focus on the days to pay their carrier. More than 70% of an LTL carrier’s costs are paid each week since an LTL carrier pays its drivers weekly and buys their fuel daily. Cash flow is significant for even the best-capitalized and best-operating LTL carriers.
Q: What is the one thing that shippers could do to better prepare their LTL shipments?
A:The shipper should communicate their shipping plan early in the day. Early communication allows the carrier to plan and execute its work with fewer errors and less cost. The shipper should update the carrier during the course of the day if the shipping plan were to change. Digital API/EDI communication is preferred to phone calls and emails.
LTL carriers’ costs are driven by time, distance, and space. A shipper should prepare each LTL shipment handling unit to maximize the pounds per cubic foot of the shipment, while minimizing the amount of space that the shipment occupies in the trailer. The extra time and expense that is spent improving the density of a shipment handling unit is more than offset by the reduction in the carrier’s cost and the price that will be charged to the shipper.
Providing shipment handling dimensions in addition to the weight for each LTL shipment will enable carriers to reduce their costs and their prices while also reducing carbon emissions on a per-shipment basis.
Q: Pitt Ohio has an extensive sustainability program. Why is this important to your company and what do you hope to achieve?
A:In 2013, Pitt Ohio initiated a sustainability strategy with a focus on people, planet, and purpose. Over the years, we have engaged our employees to take many small actions that collectively make a big difference. In the past five years, Pitt Ohio’s carbon emissions per shipment have declined by 6.1%. Pitt Ohio’s sustainability strategy has enabled the company to differentiate itself in a crowded marketplace. The sustainability strategy has enabled the company to strengthen our work culture, improve our efficiency, grow our business, and give back to the communities where we operate.
Pitt Ohio gets a lot of attention for using energy generated by our terminals’ onsite wind turbines and solar panels to power our buildings and some of our equipment. However, the vast preponderance of Pitt Ohio’s carbon emissions come from our trucks. Pitt Ohio’s strong work culture has galvanized our drivers and mechanics to improve fuel efficiency and reduce carbon emissions each and every day.
These daily small actions involve the successful execution of business basics: Fully utilize the cubic capacity of trailers, put the right-size shipment on the right-size truck, reduce empty miles, accelerate and brake gradually, and ensure that all of the tires on the trucks in our fleet are properly inflated. Proper execution of these business basics has enabled Pitt Ohio to boost its fleet’s mpg performance by 8% in the past five years. Less fuel is consumed, less carbon is emitted, and more dollars are saved.
Pitt Ohio’s sustainability initiative enables the company to position itself as an employer of choice. We find that some drivers are interested in driving new electric vehicle trucks. We also find that employee candidates want to work for a company that is focused on reducing emissions and giving back to local communities.
Q: You are the chairman of the LTL Digital Council. Would you describe the work of this group and its significance for the industry?
A: Over time, freight rates increase due to rising labor, equipment replacement, insurance, and toll costs. Successful carriers look to other areas to offset these rising costs. The LTL trucking industry has been slow to automate administrative processes. Today, most LTL shipments are tendered to a carrier with a paper bill of lading.
An LTL carrier’s costs will decrease and its service will improve when it digitizes the exchange of information between shippers, 3PLs, and carriers. Today, most shippers manage their customer orders in a digital format. However, when the shipper picks, packs, and creates an LTL shipment, this digital information is converted to a paper bill of lading. Then the carrier needs to pay an employee resource to transpose this information back into a digital format so that the shipment can be managed in the carrier’s operating system. Small-package orders have been digitally transmitted between shippers and carriers for more than 20 years.
The creation of a standard LTL billing-of-lading API [application programming interface] simplifies the process for LTL shippers, 3PLs, and carriers to move to digital communication. Digital communication will reduce cost and improve service.
The good news is that the LTL industry has made significant progress in the area of digitalization in 2023. Eight carriers have fulfilled the pledge to build an API to the NMFTA’s [National Motor Freight Traffic Association] digital bill-of-lading standard. They represent 37% of LTL industry revenue. Combined with all carriers that have pledged, they represent 72% of industry revenue.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”